Tennessee Code Annotated

Title 67: Taxes and Licenses

Chapter 5: Property Taxes

Part 2: Exemptions

TCA 67-5-207: Low cost housing for elderly persons.

(a)  (1)  Property of Tennessee nonprofit corporations that is used for permanent housing of low income persons with disabilities, or low income elderly or handicapped persons, is exempt in accordance with this section. The property must be financed by a grant under § 211 or § 811 of the National Affordable Housing Act, codified in 42 U.S.C. §§ 12741 and 8013, respectively, or the McKinney-Vento Homeless Assistance Act, compiled in 42 U.S.C. § 11301 et seq., or be financed or refinanced by a loan made, insured, or guaranteed by a branch, department or agency of the United States government under § 515(b) or § 521 of the Housing Act of 1949, codified in 42 U.S.C. §§ 1485(b) and 1490a, respectively, § 202 of the Housing Act of 1959, codified in 12 U.S.C. § 1701q, § 221, § 223, § 231 or § 236 of the National Housing Act, codified in 12 U.S.C. §§ 1715l, 1715n, 1715v and 1715z-1, respectively, or § 8 of the United States Housing Act of 1937, as amended by the Housing and Community Development Act of 1974, compiled in 42 U.S.C. § 1437f. For the purposes of this section, a loan is considered to be guaranteed if the federal housing agency has consented to assignment of a housing assistance program contract as security for the loan. Eligibility for the exemption under these programs continues so long as there is an unpaid balance on the loan, or in the case of a grant, so long as the project is restricted to use for elderly or handicapped persons or persons with disabilities as defined in the programs. The property must be used as below-cost housing for elderly or handicapped persons or persons with disabilities within the program definitions, who have incomes not in excess of limits established for the enumerated program by the department of housing and urban development (HUD). If a property was approved by HUD for participation in the program without specific low income guidelines, the property may nevertheless qualify for exemption on a pro rata basis, if at least fifty percent (50%) of the low income residents have incomes that would qualify under HUD guidelines for any of the enumerated programs. In such cases the property shall be exempt in the same percentage that low income residents represent of the total occupancy of the property at full capacity, determined as of January 1 each year, on the basis of information supplied to the assessor on or before April 20.

     (2)  In lieu of any taxes for which a property is granted exemption under this section, the owners of projects that exceed twelve (12) units shall agree to make payments to any county, municipality, metropolitan government, or district for improvements, facilities or services rendered by the county, municipality, metropolitan government or district. In no event shall such payments exceed the estimated cost to provide improvements, facilities, or services so furnished, and in no event shall such payments be required from public housing authorities operating under title 13, chapter 20. Such payment shall not be required from any project occupied prior to January 1, 1990, unless such project was the subject of a pending claim for tax exempt status before the state board of equalization on January 1, 1990. In the latter case, annual payments begun prior to April 30, 1990, shall continue to be made until the project and the recipients of the payments agree to discontinue or revise the payments. Nothing in this section shall be construed to negate any valid agreements concerning payments in lieu of taxes entered into prior to April 30, 1990.

(b)  To qualify for such exemption, any such not-for-profit corporation must first be exempt from federal income taxation by virtue of qualifying as an exempt charitable organization or as an exempt social welfare organization under the provisions of the Internal Revenue Code, compiled in U.S.C., title 26, and any amendments thereto. In addition, the not-for-profit corporation shall have charter provisions providing in substance that:

     (1)  The directors and officers shall serve without compensation;

     (2)  The corporation is irrevocably dedicated to and operated exclusively for not-for-profit purposes;

     (3)  No part of the income or assets of the corporation shall be distributed to nor inure to the benefit of any individual;

     (4)  In the event of dissolution of the corporation or other liquidation of its assets, the corporation's property shall not be conveyed to any individual for less than the fair-market value of such property; and

     (5)  All assets remaining after payment of the corporation's debts shall be conveyed or distributed only to an organization or organizations created and operated for not-for-profit purposes similar to those of the corporation.

(c)  All claims for exemption under this section are subject to the provisions of § 67-5-212(b).

(d)  Subject to the general requirements of this section for exemption of federally assisted housing, there shall also be exempted under this section those properties owned by not-for-profit organizations and funded under the HOME Investment Partnerships Program, compiled in 42 U.S.C. § 12701, et seq., or the state-funded Housing Opportunities Using State Encouragement (HOUSE) Program. To qualify, the property must be used for permanent housing for low income or very low income elderly, disabled or handicapped persons.

(e)  Nothing in this section shall be construed to preclude the application of § 67-5-212 to transitional or temporary housing that qualifies as a charitable use of property under that section.

History: [Acts 1973, ch. 226, § 5; 1975, ch. 168, § 1; 1975, ch. 323, § 1; 1983, ch. 122, §§ 1-3; T.C.A., § 67-509; Acts 1988, ch. 1002, §§ 1, 2; 1990, ch. 1009, §§ 1, 2; 1991, ch. 399, § 1; 1992, ch. 652, §§ 1, 2; 1993, ch. 454, §§ 1-3; 1994, ch. 617, § 1; 1994, ch. 645, § 1; 1997, ch. 347, § 1; 2002, ch. 704, §§ 1-4; 2008, ch. 1104, § 1; 2009, ch. 111, §§ 1, 2.]